The Carolina Products Company has completed the flexible budget analysis for the 2 nd quarter, which is as given below.
- Which of the following would be a correct interpretation of the sales volume variance for variable expenses?

Question

The Carolina Products Company has completed the flexible budget analysis for the 2 nd quarter, which is as given below. 
- Which of the following would be a correct interpretation of the sales volume variance for variable expenses?

Quizplus · Accepted Answer

Sales volume variance for variable expenses is the difference between the actual variable expenses and the flexible budget amount based on the actual sales volume. If the sales volume variance for variable expenses is favorable (less than flexible budget variance), it means that the company achieved a higher sales volume than expected, resulting in lower variable expenses per unit. Therefore, an increase in sales volume (option C) would be the correct interpretation of the sales volume variance for variable expenses. Decrease in price per unit (option A), increase in variable cost per unit (option B), and increase in fixed costs (option D) would not directly affect the sales volume variance for variable expenses.

The Carolina Products Company Has Completed the Flexible Budget Analysis